§3509 Determination of employer’s liability for certain employment taxes

Summary

It tells how to figure what an employer must pay if the employer treats a worker as not an employee and so fails to withhold required taxes. For income tax withholding (chapter 24), the employer is treated as if they should have withheld 1.5% of the worker’s wages. For the Social Security/Medicare payroll taxes (subchapter A of chapter 21), the employer is treated as if they owe 20% of the normal payroll tax amount. If the employer also fails to meet certain reporting rules (sections 6041(a), 6041A, or 6051) and the failure is not because of reasonable cause, those rates double to 3% and 40%. The rule does not apply if the employer intentionally ignored the duty to withhold. The worker’s own tax is not changed by this, the employer cannot collect these amounts from the worker, and sections 3402(d) and 6521 do not apply. It also does not apply if the employer did withhold any income tax but failed to withhold the payroll tax, or for certain people listed in section 3121(d)(3).